March 01, 2008

Budget 2008: : Exemption limit raised and slabs changed

The FM has finally rewarded taxpayers for their improved compliance. And how. He has raised the threshold income when you start paying tax by a steep Rs 40,000 to Rs 1,50,000.

For women, the exemption limit goes up to Rs 1,80,000 and for senior citizens to Rs 2,25,000. He has also expanded the income brackets where the higher rates of 20% and 30% kick in, to leave more money in the hands of individuals, whether to splurge or save.

So, if your taxable income is above Rs 1.5 lakh but below Rs 3 lakh, you could end up paying just 10% income tax. A senior citizen with an annual income of Rs 5 lakh now ends up saving Rs 40,000 on tax outgo. Working women, on the other hand, will tot up tax savings of around Rs 45,000.

For those earning Rs 10 lakh and above, the savings work out to Rs 50,000. For the aged, there will be no tax liability in reverse mortgage schemes. They can also hope their children to get additional health covers for them in return for tax deduction of Rs 15,000. Clearly, no one’s complaining.

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